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Q No 3: The most likely outcomes for a particular project are estimated as follows: Unit price: $50 Variable cost: $30 Fixed cost: $300,000 Expected sales: 30,000 units per year The project will last for 4 years and requires an initial investment of $1 million, which will be depreciated straight-line over the project life to a final value of zero. The firm's tax rate is 35 percent and the required rate of return is 12 percent. a). What is project NPV? B). what is NPV if fixed cost increased rom $300

Q No 3: The most likely outcomes for a particular project are estimated as follows: Unit price: $50 Variable cost: $30 Fixed cost: $300,000 Expected sales: 30,000 units per year The project will last for 4 years and requires an initial investment of $1 million, which will be depreciated straight-line over the project life to a final value of zero. The firm's tax rate is 35 percent and the required rate of return is 12 percent. a). What is project NPV? B). what is NPV if fixed cost increased rom $300

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Q No 3: The most likely outcomes for a particular project are estimated as follows: Unit price: $50 Variable cost: $30 Fixed cost: $300,000 Expected sales: 30,000 units per year The project will last for 4 years and requires an initial investment of $1 million, which will be depreciated straight-line over the project life to a final value of zero. The firm's tax rate is 35 percent and the required rate of return is 12 percent. a). What is project NPV? B). what is NPV if fixed cost increased from $300,000 to $350,000?
Transcribed Image Text:Q No 3: The most likely outcomes for a particular project are estimated as follows: Unit price: $50 Variable cost: $30 Fixed cost: $300,000 Expected sales: 30,000 units per year The project will last for 4 years and requires an initial investment of $1 million, which will be depreciated straight-line over the project life to a final value of zero. The firm's tax rate is 35 percent and the required rate of return is 12 percent. a). What is project NPV? B). what is NPV if fixed cost increased from $300,000 to $350,000?
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